Saturday, May 18, 2024

Pakistan Starts Work to Complete 80-km Section of Pak-Iran Gas Pipeline

The impending visit of Iranian President Ebrahim Raisi to Pakistan on April 22 has spurred significant preparations, notably the initiation of work on an 80-kilometer stretch of the Pakistan-Iran gas pipeline from Gwadar to a point where it can connect with the Iranian segment. This move underscores both nations’ commitment to advancing this vital energy infrastructure despite facing formidable challenges.

The Inter-State Gas Company (ISGS) has taken proactive measures by issuing tenders to consultants for re-validating surveys and conducting Front-End Engineering Design (FEED). These steps are crucial as the project has encountered substantial delays attributed partly to explicit opposition from the United States, including the threat of sanctions.

Tehran’s issuance of a final notice to Islamabad in January further underscores the urgency of completing Pakistan’s side of the pipeline by February-March 2024 to avoid an $18 billion penalty stipulated in the Gas Sales Purchase Agreement (GSPA). Consequently, the current focus on laying down the 80-kilometer pipeline section is paramount to sidestepping arbitration and potential penalties.

The initial capacity of this pipeline segment to absorb 100mmcfd is significant, given the project’s anticipated capacity of 750mmcfd over 25 years. However, the completion of this segment is not only vital for meeting immediate energy needs but also symbolizes the enduring partnership between Iran and Pakistan amidst geopolitical challenges.

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